Aurobindo Pharma to buy parts of Sandoz US business for $900 mn

G Naga Sridhar Sept 6 | Updated on September 07, 2018 Published on September 06, 2018

N Govindarajan, Managing Director, Aurobindo Pharma

The transaction will position Aurobindo as the second largest dermatology player and the second largest generics company in the US by prescriptions.

The deal also includes about 300 products and additional development projects of Sandoz and an additional $100 million in performance-based payments.

To acquire dermatology, oral generics divisions while Novartis will retain biosimilars

Aurobindo Pharma Ltd has signed a definitive agreement to acquire certain assets from Sandoz Inc, USA , a Novartis division for a consideration of $0.9 billion ($900 million).

The proposed acquisition comprises dermatology business and a portfolio of oral solid products along with commercial and manufacturing infrastructure in the US.

The acquisition will be on debt-free and cash-free basis and will be made through its wholly owned subsidiary.



Aurobindo’s scrip gained 4.15 per cent after opening of trade on the Bombay Stock Exchange on Thursday and was trading at Rs 725 at 10 am today.

Second largest dermatology player

"The acquisition announced today is in line with our strategy to grow and diversify our business in the US. Acquiring these businesses from Sandoz will allow us to further expand our product offering and to become a leading player in the generic dermatology market,’’  N  Govindarajan, Managing Director of Aurobindo Pharma, said in a release issued here on Thursday.

Overall, the transaction will position Aurobindo as the second largest dermatology player and the second largest generics company in the US by prescriptions.

"We will be focused on leveraging our group's market leading vertically integrated and highly efficient manufacturing base to enhance the market position and medium-term profitability of the businesses we are acquiring," he said.

Aurobindo Pharma USA Inc and Sandoz will enter into a transitional services agreement to support the ongoing growth plans of the businesses being acquired by the Indian company.

What the deal includes

Acquisition will include in-line portfolio of dermatology and oral solids, authorised generics and in-licensing products, branded dermatology products, three manufacturing facilities at Hicksville,  Melville and  Wilson  and 100 per cent shareholding in Eon Labs Inc, a wholly owned subsidiary of Sandoz.

It will add approximately 300 products including projects in development as well as commercial and manufacturing capabilities in the US, complementing and expanding the group's portfolio and pipeline.

The net sales of the acquired business were around $ 1.2 billion for the calendar year ended December 2017. 

The portfolio being divested generated sales of $0.6 billion in first half of  2018 for Sandoz. After expiration of certain in-licensed product contracts, and rationalisations of acquired products that will not negatively impact profitability (but before the impact of any potential FTC-led divestments) the portfolio is expected to generate over $0.9 billion in sales for the first 12 months after completion of the transaction for Aurobindo.

The transaction is expected to close in the course of 2019 following the completion of customary closing conditions, including FTC clearance.

Transaction is expected to be accretive to normalised EPS from first full year of ownership, the company said.

Published on September 06, 2018
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